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What economic themes have been dominating market newswires so far this week? Here’s my list!

Midweek Market Analysis

Greece, Greece, and more Greece
Greece is at the center stage of market talks this week as the country heads for a new election in about a month. If you haven’t already noticed, the possibility of not having a Greek government that would approve austerity measures in time for the next bailout tranche has been weighing on high-yielding currencies and dictating appetite for risk. Of course, it doesn’t help that Greece’s 2023 bond yields are above 30% for the first time in history, while Greek depositors withdrew 700 million EUR from local banks on Monday alone. Yikes!

China cuts RRR by 50 basis points
Even before Greek government talks completely broke down, China has already set the tone for risk last weekend when it cut its reserve requirement ratio by another 50 basis points to only 20%. The move might be in line with the government’s goal of boosting domestic economic activity, but it has also signaled that China’s growth isn’t as strong as market players think it is. This led to the selling of export-related currencies like the comdolls early in the week.

Commodities and Comdolls drop sharply
ComdollsWith the commodity-lovin’ China signaling weaker-than-expected growth and concerns on a euro contagion dominating markets, it’s no surprise that commodities and the comdolls are taking on big losses across the board. Oil fell to its lowest level since December early today, while gold also surprisingly fell to its December lows.

Almost all of the Greenback’s counterparts weakened this week, but NZD/USD dropped the sharpest with a 1.64% plunge as of Wednesday UK session. Hmm, must be the disappointing retail sales numbers we saw last weekend. Meanwhile, AUD/USD is also down by 0.75% since the start of the week, while USD/CAD is up by 0.81%. Good thing I closed my USD/CAD trade last week!

That’s it for my midweek analysis today! Did I miss any other market theme that had a big influence on price action?

Potential Trade Setups

AUD/USD: Bullish divergence forming?
AUD/USD Divergence
This pair has been ridiculously oversold for the past few weeks and I’m thinking that a reversal could be in the works. Right now, a bullish divergence seems to be brewing on the 1-hour time frame, with stochastic making higher lows and AUD/USD making lower lows.

NZD/USD: Potential retracement play
As Big Pippin pointed out, NZD/USD looks ready to pull back to the falling trend line, former support, and 50% Fibonacci retracement level. See the setup.

USD/CAD: On breakout watch
Alas! Parity just won’t let up! Could this mean that USD/CAD is revving for an upside breakout beyond the 1.0050 resistance? How high can it possibly go? See the setup.

Comdoll Event Highlights for May 14-18, 2012


Interest rate speculations will most likely dominate this week’s comdoll trades as the RBA releases its meeting minutes; Canada prints its CPI report, and the FOMC conducts its meeting. Will we see changes in the central banks’ plans? Right now analysts are predicting more rate cuts from the RBA, a rate hike from the BOC, and no policy change from the Fed. Should be an interesting week, don’t you think?

But enough about the central banks. Let’s take a look at the significant inflection points on our comdoll charts:

Significant Levels to Watch Out For

Week Open (WO)
Previous Week High (PWH)
Previous Week Low (PWL)
Top Weekly ATR (tWATR)
Bottom Weekly ATR (bWATR)
Other significant levels
1.0130, 1.0000
1.0050, 0.9850
0.8100, 0.7870

In case you’re wondering what ATRs are all about and how I computed those figures, make sure you check out my entry explaining my trading strategies.

If you’ve got any trade setups you’d like to share, you know where to reach me!

Good luck in your trades this week, buddies!

Happy time

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.